Amazon’s Flexible Payments Service to compete with Google Checkout, PayPal

Online vendors have another service to choose from for payment processing: …

A new payment service for online vendors has entered the scene, this time introduced by online retail giant Amazon. The Amazon Flexible Payments Service offers an extensive API to developers that will allow them to process payments on their own websites, which can be easily scaled up or down to handle whatever traffic volume is needed. If successful, Amazon FPS will compete with other similar services such as Authorize.net, PayPal, and Google Checkout.

Amazon FPS is an extension of the older Amazon Payments service, which allowed third-party vendors to receive payments for products they sold through Amazon's website. And while that setup offered a lot of online exposure to those vendors, its flexibility was limited to items sold through Amazon.

One benefit that the company touts is that it allows users who already have Amazon accounts to use their already-existing account information for their purchases. This means that won't have to reenter that same information on another site, which can be a pain in the butt—you know the process: shipping address, billing address, credit card info, shipping preferences, etc.

There are also no minimum fees for companies that want to use the service, and no startup charges either. According to the company, all pricing is based on transaction size and payment method, charged to the vendor on a per-transaction basis. Google Checkout currently offers a similar deal, but only until January 1, 2008.

Another major draw to Amazon FPS' fees (or the lack thereof, in this case) is the obscenely low cost of processing micropayments. PayPal offers its own micropayment service, but the fees involved mean that PayPal's micropayments can't be that "micro" if the vendor wants to be at all practical. As the folks from Freshbooks discuss on their company blog, Amazon's micropayment system allows a vendor to bill for as low as once cent per month if they should so choose, and the transaction fee to the vendor for any such micropayments will only be one quarter of a cent. According to Freshbooks, this "changes the game for the entire web."

Vendors looking for a completely integrated checkout solution may still want to seek out other options like PayPal and Authorize.net, as Amazon FPS currently functions as a payment redirect service like Google Checkout, according to TechCrunch. But for smaller vendors, Amazon's solution could certainly make it easy to begin processing payments online with minimal commitment. Amazon is offering its new service as a limited beta, and the company is accepting new signups until it feel it has reached max beta capacity.